The Business Council SUPPORTS this legislation that would provide employers the choice of selecting certain types of group and blanket disability policies.
Group and blanket disability insurance policies protect employees in the event of income loss due to injury or illness. This type of insurance helps families to pay the mortgage, car payments, utilities, groceries and other necessities. It also provides all types of businesses the added flexibility of allowing employees to return to work when they are ready.
In 49 of 50 states, group and blanket disability insurance policies contain a provision to exclude persons with a preexisting medical condition. The basis of this provision is to prevent an individual or business from simply purchasing insurance in advance of quickly filing a claim for benefits. Preexisting condition exclusion provisions help to control costs of disability insurance policies. Premiums for group disability policies issued in New York are currently up to 12% higher than outside New York because insurers cannot write coverage with a preexisting condition exclusion.
Due to a recent NYS Court of Appeals decision (Benesowitz v. Metropolitan Life) New York is the only state in the nation that mandates coverage for preexisting conditions in group and blanket disability policies. The mandated coverage clearly places New York state businesses at a competitive disadvantage because it makes providing this type of insurance more costly, and in some instances, unaffordable for employers and employees.
This bill would amend §3234 of the Insurance law to require disability income insurers to make available to employers who purchase group or blanket disability insurance the option of a contract with a pre-existing condition exclusion provision. This bill would require insurers to offer employers a group disability contract with a provision that establishes that a pre-existing condition that occurs prior to an employee's effective date of coverage, and results in the disability of that employee within the first twelve months after the effective date of coverage, would be excluded from coverage. Insurers would also be required to offer to employers a contract that would limit but not exclude disability coverage for pre-existing conditions. Employers could choose which of these options they want in their contract.
In order to bring New York back into national conformity and help control the cost of group and blanket disability insurance, The Business Council SUPPORTS the enactment of S.2557 (Seward)/A.4098 (Morelle).